GST collection in November seen at lower than Rs 83,000 cr in October; errant taxpayers face crackdown

Saddled with a massive amount of unverified input tax credit (ITC) claims from the taxpayers, the government fears that the goods and services tax (GST) revenue for November could be lower than Rs 80,000 crore. Government officials told FE that deferment in filing comprehensive triplicate forms (GSTR-1,2 and 3) has left the government with no viable option to check veracity of taxes paid and credits claimed. The finance secretary met revenue department officials from states and Centre on Saturday to analyse the GST collection trend to plug leakages following the reduction in October mop-up to around Rs 83,000 crore. This was much lower than the average collection in the first three month at over Rs 90,000 crore. Additionally, officials said there was a danger that the decline in revenue collection could continue in the months after November until the filing of triplicate forms starts in April next year. “The dealers know that it is impossible for the department to verify each claim and hence a trend has emerged where ITCs have skyrocketed. In hindsight, invoice-matching should never have been completely deferred as it has sent a wrong signal to the assessees,” an official told FE.

At the time of GST launch in July, the taxpayers were required to file triplicate forms which were supposed to capture the transactions of a businesses and the same could be electronically verified with other dealers in the supply chain. However, due to technical glitches suffered by the GST Network, the IT backbone of the new tax regime, the government deferred filing of these return forms till March next year. Meanwhile, taxpayers were allowed to file GSTR-3B, a summary return with self-assessed tax liability and credit claims. “Technical glitches played a role in deferment but it seems likely that dealers have also colluded to ensure that the triplicate forms are not only delayed but is eventually done away with. Without this mechanism, there would be no GST at all,” the officials quoted above said.

While the government has been trying to look at alternative to verify the legitimacy of claims filed in the one-page GSTR-3B data by collecting data manually, the officials say it was not possible to do so for nearly 90 lakh assessees with the available resources. Despite the cumbersome process, which has been made further onerous as taxpayers aren’t obliged to share such information to this informal request, the tax officials have been instructed to continue to collect detailed data on central GST, state GST, integrated GST and compensation cess paid by assessees against pre-GST revenue of the corresponding period. In cases where it is possible, the officials would also take VAT and CST revenue into account.

The tax officials would meet soon to devise a definitive plan for tackling the current blind-spot. In the meanwhile, the officials said that the current approach was too blunt and was unlikely to yield any substantial breakthrough.